Befits street

[Ray Stafford]

Hi Zeb.

I think we have such way different world views that we will never meet in the middle, but I will try anyway.

Firstly, lets take poverty. So long as you define poverty as a percentage of median income (which is how we define it in britain) then there will always be poverty - its a statistical certaintly. In fact, because of the way that we calculate the poverty line, if lots of middle income people suddenly got a payrise, then another 100,000 would drop below the poverty line, even though their situation would not have changed.

My Grandmother talked to me about life in the 1920s, during the general strike. There was a lady who knew what poverty was. If she were still alive, she would look at people "in poverty" today and mutter "don't know they're bl00dy born".

And whats wrong with inequality, and why shouldn't it grow?

If you work longer hours, or do a better job than the next guy, don't you deserve more money? If the guy running one of my competitors makes twice as much profit as me, doesn't he deserve twice as much pay?

I could go on, but I won't. I will leave you with this short anecdote about tax and wealth.

How Taxes Work . . .

This is a VERY simple way to understand the tax laws. Read on — it does make you think!!

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.

That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?"

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man who pointed to the tenth. "But he got $7!"

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too . . . It's unfair that he got seven times more than me!".

"That's true!" shouted the seventh man, "why should he get $7 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!
​

Just as an aside, did you know that the top 1% of earners (thats people with incomes over £160,000) will pay 30% of all income tax in the UK in 2013/14. B@st@rd fat-cats. Better off without them.


​

 

[zeebeedee]

Of course people deserve better pay for a better job that goes without saying but how does relate to the fact the national minimum wage is far too low? Im not saying profit is evil but it is evil when its at the expensive of others. Tescos could pay a higher wage so the single mum can afford to feed her kids and still make a profit however greed takes over.

There are 2 sides to that tax system story if the lads stopped working for a rubbish wage who would make him rich? That is classic tory nonsense to brainwash people that there is no other way of working things. The system should be mutually beneficial to all not just the elite few!

 

[cr0ft]

Zeb, if the national minimum wage goes up in a huge jump as it's way too low, what do you think will happen to the cost of food in our supermarkets? Energy supplied to us? Many of the people working in these organisations are on national minimum wage.

I'll tell you what will happen - prices will go up to recover the cost of wages. In a large jump. Suddenly the national minimum wage will be too low again.

Large jumps in national minimum wage won't solve anything in my opinion.

 

[zeebeedee]

See thats the mentality we have in this country we are led to belive these firms have to recoup the cost elsewhere. Why do they? Why cant they just make less profits? Do they really need them extra 0's on that screen!

 

[Irish]

Mate, you have been reading way too much Karl Marx (or the daily mirror)
Not often I'd disagree Ray but sounds more guardian than daily mail to me !

 

[Irish]

See thats the mentality we have in this country we are led to belive these firms have to recoup the cost elsewhere. Why do they? Why cant they just make less profits? Do they really need them extra 0's on that screen!

Do you work just to cover your costs zeeb? Or do you make profit on any materials you buy?

 

[SafeGasInstall]

I personally thing that more then 50% of the houses in London are HA

 

[Ray Stafford]

See thats the mentality we have in this country we are led to belive these firms have to recoup the cost elsewhere. Why do they? Why cant they just make less profits? Do they really need them extra 0's on that screen!

Thats a good question, and the answer is complex.


The managers of large businesses run them on behalf of the absentee owners (shareholders). They have a legal duty to run them as profitably as they can on behalf of those shareholders.

We normally portray shareholders as cigar-chomping fatcats, swilling champers and grinding the widows and orphans under their expensive boot heels.

Most large businesses are owned by institutional shareholders - thats pension funds, insurance companies and unit trusts etc. Basically, everyone's savings. The people running those institutions have a legal duty to try to maximise their returns.

When you retire and buy an annuity with your pension lump sum, you will shop around for the best rate. Similarly if you are looking for a unit trust for your ISA savings, you will look for the best return you can find. The pension/unit trust company that pays the best rate will be the one with the best performing investment strategy. It will have to invest in the most profitable businesses paying big dividends.

If Tesco were to announce that they were going to reduce profits, and therefore dividends in order to boost pay above the industry average, then your pension company, WORKING ON YOUR BEHALF, AND IN YOUR BEST INTERESTS, would drop Tesco shares like a hot brick. This is a powerful disincentive for Tesco managers to consider this strategy.

Eventually, if Tesco persisted in this strategy, their shares would eventually descend in value to the point where Lidl (or someone else with a lower wage policy) could simply buy them, and return them to full profit by cutting wage costs.

 

[Ray Stafford]

I personally thing that more then 50% of the houses in London are HA

Depends on the borough. Some have huge stocks of social housing, but some almost none.

 

[Ray Stafford]

Incidentally, I don't think that Tesco pay National Minimum Wage. According to salary comparison site Glass Door, they pay £6.78 per hour at entry level jobs, which is about 7.5% more than NMW. Not sure how reliable that is though.

 

[Ray Stafford]

I personally thing that more then 50% of the houses in London are HA

Just looked it up. According to this site just under a quarter of london households rent either directly from the council, or from HAs.

 

[Nostrum]

I've no problem with profiting of your hard work etc.

my problem is the bak hand deals we seem to see happening, post office shares being the latest to hit the news, the Olympic stadium, the banks we bailed out.

Then there are the tax bills avoided by hugely profitable companies.

I've worked since I was 16. Other than the holiday and sickness we all have to take off, the only other time I haven't worked was when I was made redundant. This was due to the recession and government intervention, the company wound up to save going bankrupt. The recession was influenced by poor business tactics by banks which were bailed out with tax payers money. The government intervention was later deemed illegal (solar P.V feed in tariff change)

I had zero influence in either of these issues. I had bought a house, lived within my means. No huge credit to try and cover, cancelled all 'luxuries' when I found out I was losing my job, sky tele etc

i walked into the job centre expecting something to assist me through the bad time, nothing. In fact I was entitled to less because it was contribution based JSA rather than income based JSA. No help towards paying my mortgage even short term. The bank didn't want to know. The fact is they would have been perfectly happy to see me lose my house for them to repossess.

Yet the bloke stood next to me with no teeth who left his half drunk can of Stella on the step before walking in, greeted personally by the security guard by his first name on entry, has been living in his council house paid for by tax payers money for however long and is just popping in to pick up his weekly pocket money.

It's not a black and white issue, I don't know the answer as I'm not an economist (and even they get it wrong quite often) it's some shade of grey. All I know is I'm sick of paying about 30% of my wages that I spend 50% of my life earning, for a broken system that's not changing.

if you earn enough money to be comfortable it's all just a topic of conversation, but when your put in a situation where you are directly affected by said system you realise just how unfair it is, how morally wrong it is and how completely abused it has become.

 

[Nostrum]

And I can't even edit my typo's in here!

 

[zeebeedee]

But if it was law every firm would be in the same boat and therefore still competitive, whoever is making the profits it's still too much when we have food banks in the 21st century simple as!

Of course I make profit on what I do, but if I employed someone I wouldn't see them starve to make more!

I mean think about how absurd it really is. Tesco make massive profits whilst the single mum slaves away on the checkout, she finishes work walks past aisles and aisles of food she can't afford and goes home to empty cupboards and hungry children sticks on the telly and sees tesco announce there finding it hard this year as profits fell to 2.1 billion (just an example don't quote me on it). It's completely absurd. There is enough wealth in this country to lift people out of poverty and still enable the rich to have a nice lifestyle!

Just for the record I never read the papers and rarely watch the news it just angers me with the lies and corruption. I take my views from what I see.

 

[Ermintrude]

Well the upper ranks of government gonna be fed up. Tried ever possible fiddle to get the unemployed below7% so investors and savers ( main voters) are better off. But Bank of England not happy as statistics not reflect true employment just the numbers of those who have been unable to claim JSA

 

[Ermintrude]

So long term low base rate!!!!!

 

[IDCHAPPY]

I'm happy with a low base rate, means a cheaper mortgage for me

 

[Ray Stafford]

Tesco make massive profits

Yes, they do - because they are a massive company. But they also have a vast amount of shareholders money invested in their business.

If you bought Tescos shares in the last 12 months, you would have paid somewhere between £3.19 and £3.87, depending on when you bought it. You would have received £0.1496 in dividend, a rate of return of between 4.7% (if you bought cheap) and 3.7% if you bought at the height. Whilst this is a bit better than you might get in the high street building society, its hardly excessive, bearing in mind the risk - those people who did buy at £3.87 stand to lose 60p per share if they sell today.

If you look at the average number of employees (expressed as FTE - full time equivalents), and then divide out into sales per employee and operating margin, you can see that Tescos makes £6742 before tax for every employee that works there. Of that £6742, 23% will go in corporation tax, leaving £5191 profit per employee, out of which must come those 14.96 pence dividends to the shareholders and any future investments.

Again, thats a decent rate of return, but I don't think anyone would call it excessive. Would you go to the trouble of employing someone to make £100 a week from it?

Or look at it another way - if you ran a business employing 10 people that made 52 grand profit per year, would you think that was excessive? I wouldn't. The only difference with tesco is that the scale is different.

Not having a pop at you particularly Zeb, but I hate the way we treat success in this country.

 

[Ermintrude]

Jesus if we only made 100 off each lad wouldn't be worth it. On install after wages and materials look to have £500 per day left over, covers overheads and makes up for when out servicing as when servicing properly it's a break even event £48 to £85 depending on appliance. Both plus of course.

 

[Ray Stafford]

Jesus if we only made 100 off each lad wouldn't be worth it. On install after wages and materials look to have £500 per day left over, covers overheads and makes up for when out servicing as when servicing properly it's a break even event £48 to £85 depending on appliance. Both plus of course.

The £100 per employee per week is after overheads and tax are paid, but before dividend Guy. I still don't think its excessive though.

 

[Ray Stafford]

One last point before I give up politics for the weekend.

As far as I can tell, the biggest fat-cat shareholder in Tesco is American investor, Warren Buffett. His investment company Berkshire Hathaway owns just under 4% of Tesco, and he personally owns about 1/4 of Berkshire Hathaway, so effectively he owns 1% of Tesco. He started his investment career in 1950 with just under $10,000 of savings.

Now, is Warren Buffet your typical, cigar chomping, champagne swilling, caviar eating capitalist fat cat?

Well, in 2006 he gave $30.7 billion - yes BILLION - to charities, mostly the Gates foundation. Thats just the most impressive single act out of a long line of philanthropic actions, and approximately the equivalent of $500 for every man, woman and child in the UK.

What a b@stard.

 

[Nostrum]

Well I didn't get mine!..

 

[zeebeedee]

Which ever way the system works its not working if working people have to go to food banks to feed there kids! Simples !

Anyway its Saturday, I'm off the gym then pub in that order!

 

[Ray Stafford]

Anyway its Saturday, I'm off the gym then pub in that order!

Well, I can at least agree with half of that!

 

[cr0ft]

See thats the mentality we have in this country we are led to belive these firms have to recoup the cost elsewhere. Why do they? Why cant they just make less profits? Do they really need them extra 0's on that screen!

We both agree on that one. They don't but we both know that they would! All keeps the shareholders happy. You could argue that shareholders in PLCs are the parasites that cause the problem couldn't you..